Europe Shares Look Weak as Moody's Cuts Spain Rating

European futures fell further on Thursday after Moody's announced that it had downgraded Spain's sovereign debt by one notch to Aa2 with a negative outlook.

According to BGC Partners, the UK's FTSE 100 index will open 40 points lower at 5,897, while Germany's DAX index will fall 51 points to 7,080 and France's CAC index will drop 33 points to 3,960.

European shares were already expected to follow Asia into the red, as higher crude oil prices continue to dictate market direction.

Martin Oeser | AFP | Getty Images

A trader sits in front of a board displaying Germany's share index DAX at the stock exchange in Frankfurt/Munich, western Germany.

Asian stocks were weighed down by worries that a surge in oil prices could exacerbate inflation pressures in the region and cripple economic growth.

Brent crude was back above $116 a barrel, while U.S. crude traded at more than $104 a barrel after Libyan leader Muammar Gaddafi bombed oil facilities in the eastern part of the country.

European stocks closed lower on Wednesday, led down by oil majors and bank issues, amid continuing concern over the unrest in North Africa and the Middle East, and as sovereign debt fears resurfaced. The Stoxx Europe 600 index closed down 0.2% at 281.17.

All eyes will be on the Bank of England's policy decision Thursday at 12:00 GMT Thursday.

The Bank is unlikely to follow the European Central Bank's hawkish stance, as it is more willing to put up with higher inflation to boost growth, analysts told CNBC.com.

Macroeconomic data on the agenda include German foreign trade data and manufacturing turnover data for January, as well as Spanish retail sales and UK industrial production figures, also both for January.

The European sovereign debt crisis also remains firmly on the radar. Rules covering new capital requirements for Spanish banks come into force Thursday as Spanish authorities try to restructure and strengthen the solvency of the Spanish financial system that was badly hit by the financial crisis.

EU Foreign Ministers and NATO Defense Ministers hold meetings in Brussels to discuss the situation in Libya, where fighting between forces loyal to embattled leader Muammar Gaddafi and opposition forces seeking to overturn his 42-year rule has intensified.

The tensions in Libya will continue to determine the tone for oil prices Thursday, when Persian Gulf officials will decide the size of an economic aid package to support Bahrain and Oman when they meet in Saudi Arabia.

The aid package is a Gulf Cooperation Council (GCC) initiative to support Bahrain and Oman.